A Hollande Europe?

Hollande is likely to become France’s next President after Sunday, but wider implications could a socialists rise to power have on Europe, particularly the Eurozone countries. The Dutch government has already fallen, the Spanish government is experiencing serious protests and Greece is approaching elections.

So what does Hollande have to offer to a Europe still in crisis? Most importantly he offers an alternative to fiscal austerity; he says that he will re-orientate the European economy to growth and jobs (much like what the Labour Party advocates here as well as an Obama-style stimulus) and away from harsh, growth killing budget cuts. Although he disagrees with Merkel and other north-European leaders on the policy of austerity he does believe firmly in fiscal responsibility and the Euro project. The key difference on fiscal responsibility is that Hollande believes that it should come later, that the European economy is already on a path to recovery before the government reigns necessary spending.

The centre-right currently have control over the vast majority of the European Union, they have failed epically to deal with the financial crisis. One important part of Hollande’s vision for Europe is stimulus, which is funded by borrowing. This poses one major problem; the Mediterranean countries cannot borrow at a cheap rate and would be unfeasible for them to do so. On the other hand, north European countries such as Germany and Finland have low interest rates and can borrow cheaply. I find it difficult to imagine the Germans borrowing more money to facilitate a Greek stimulus; it would be political suicide for Merkel. So although the vision of growth would be perfect for northern Europe, it would still leave the question of what to do with the Mediterranean countries and Ireland. Hollande will need to think about this if he is to solve Europe’s difficulties!